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Building Apps That Avoid In-App Taxes

Freedom has always been the cornerstone of technology. And yet, there is no freedom without options. For example, users should have a choice in how they pay for digital goods offered in-app. Although the Supreme Court’s recent decision in the battle between Epic Games and Apple was mixed, the judges ruled Apple cannot stop developers from directing users to other methods of payment in their apps. That’s good news for app developers looking for alternatives.

There are many different options for hosting payments — in-app or on the web, developing an actual web app that would not require mandatory taxes, a hybrid of in-app and outside the app, and so on. The options are ever-changing, so it can be difficult to keep up. 

Let’s take stock of some real choices available today, and ways that you as a developer can more easily build out solutions that give your organization more flexibility and save money that would otherwise be spent on commissions. 

To Pay or Not to Pay Is Not the Question

While the tactics mentioned above are ways to try and seek direct, commission-free payments from app users, many apps don’t mind paying taxes. Apps that try to circumvent taxes might run the risk of offering a broken experience to their consumers, especially apps that are not yet category leaders. To solve the issue, app developers should consider building the following capabilities in-house or outsourcing them to ready off-the-shelf platforms. 

Single Source of (Subscription) Truth

Some platforms only provide aggregate-level, limited subscription data for in-app transactions. Multi-platform apps would require subscriber-level data from across platforms like the App Store, Play Store, or web app. Sourcing all this data could pose a challenge and if not streamlined into a single source of truth, it could slow down revenue growth operations for apps.

Seamless Testing and Experimentation

Some platforms only allow for very constrained testing. App developers are limited to testing in sandbox accounts and some of them don’t allow for testing the act of refunds and other business cases. In case developers intend to A/B test for different pricing plans with a select set of users, they can’t run the same on the app. It is imperative to test multiple pricing scenarios to arrive at a pricing mix that works best.

Custom Reports and Dashboards

Developers are looking for some visual representation of the overall subscriber base and related revenue metrics. What’s needed is an interactive dashboard that can offer App owners dynamic insights into the subscriptions they offer and serve.

Unified Integrations and Automation

Any server notifications about subscription events from platforms need to be interpreted and acted upon by downstream automation systems in your tech stack. Instead of consuming notifications of different systems differently, having a standardized API and webhooks model can significantly reduce build and maintenance costs for automation and integrations.

Write Your Own Growth Story

Amidst regulatory buzz and ongoing court rulings, how can developers ignore all the noise and instead focus on serving their customers best? Here are a few suggestions that can help:

  1. Be In Control. Businesses need to be in the driver’s seat when designing their customer relationships, including how their customers pay them. There are ways for Apps to enable payments and monetize their app offerings through independent non-store channels. 
  2. Be Multi-Platform Ready. All of us increasingly find ourselves surrounded by internet-connected devices all the time. We have come to expect a uniform, seamless and holistic experience across platforms. Apps ought to live up to the challenge of transcending all devices. 
  3. Gain Access to Subscription Data. Presently, some platforms only provide revenue data at an aggregated level and don’t enable visibility at the subscriber level. As a result, apps must set up tooling to gain full access to their revenue data at its granular best. Only then will they be able to gain actionable insights and unlock faster subscription revenue growth. 
  4. Establish a Direct Line of Communication with Subscribers. Apart from maintaining a stronghold over their user data, apps should also build their own customer-communication system to connect with subscribers not only in-app but via email and other messaging channels.

Developers have proven their resilience time and again. While the verdict on platform taxes is not solely in the hands of developers, they can always choose to prepare themselves to write their own growth story.

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